Buffett’s Newspapers Lose Readers as Bet on Local Awaits PayoffEdmund Lee
Even Warren Buffett can’t escape the sting of the declining newspaper business.
The billionaire’s papers saw a collective 5.6 percent drop in daily readers, according to the latest annual report of his investment firm, Berkshire Hathaway Inc. Readership fell at 26 of the 28 newspapers he’s owned for more than a year, according to a comparison of a chart in the March 1 document and the prior annual report.
Buffett has acquired smaller dailies such as Alabama’s Dothan Eagle and Nebraska’s Kearney Hub with the idea that they would be crucial sources of local information with few competitors. Yet national publications such as the New York Times have moved more quickly to adopt digital subscriptions, expanding circulation to help make up for the still-declining advertising business.
While his newspapers are embarking on their own digital strategy, Buffett hasn’t been able to move speedily enough to avoid the erosion that has afflicted the industry. U.S. newspaper revenue has fallen by more than a third since it hit its sales peak of $60.2 billion in 2005, according to the Newspaper Association of America.
The slide in Buffett’s newspapers represents the first full yearly comparison of his newspaper empire, which has been expanding since late 2011 with the $200 million purchase of his hometown daily, the Omaha World-Herald. In total, Buffett has spent at least $344 million purchasing news properties across the U.S., betting that despite the industry’s downturn, local news will win out in the end.
“Papers delivering comprehensive and reliable information to tightly bound communities and having a sensible Internet strategy will remain viable for a long time,” he wrote in an investor letter included in the 2012 annual report. “We do not believe that success will come from cutting either the news content or frequency of publication.”
Buffett’s letter in this year’s report didn’t mention his newspapers.
The New York Times, which began charging readers for online access in 2011, reported a 15 percent increase in daily circulation, including print and digital readers, in 2013 from the year before. Daily circulation at Gannett Co.’s USA Today surged 65 percent, though that included access through the company’s free mobile applications.
On the other hand, Buffett’s small-town papers did better than many large regional publications. Daily circulation at Gannett’s Arizona Republic and Tennessean each slid 11 percent last year.
Berkshire’s news division is run by Terry Kroeger, 51, an almost three-decade veteran of the World-Herald. Kroeger has embarked on his own online-subscription strategy to return the publications to growth.
“You can’t spend millions of dollars assembling something and then give it away,” he said in a 2012 interview. He didn’t immediately return a request for comment yesterday on the most recent circulation decline.
Digital subscriptions have taken root across the industry, with about 41 percent of U.S. newspapers charging online, according to a report by Ken Doctor, a media analyst with Outsell Inc.
Readership fell at Buffett’s three biggest publications: the Buffalo News, one of Buffett’s earliest newspaper acquisitions and the largest in his collection, with a 4.6 percent slide in circulation; the World-Herald, with a 5.3 percent decline; and the Times-Dispatch of Richmond, Virginia, with a 4.6 percent drop.
Altogether, Buffett’s 28 newspapers had about 767,771 daily readers last year, compared with about 813,275 in 2012. The drop in Sunday circulation was even steeper, falling 6.9 percent to 979,603 readers across 26 publications.
Berkshire shut down one of the publications it acquired from Media General Inc. in 2012 after determining that the Virginia paper couldn’t generate sustainable profits. It has also cut jobs in information, technology and production departments at the Tulsa World in Oklahoma to save money.
Newspapers still represent a tiny part of Buffett’s business. Berkshire’s media group, which doesn’t include the Buffalo News, had sales of about $520 million in 2013, part of the company’s total revenue of $182.2 billion.